Montana Governor Runs State 'Like a Ranch'

As the first Democratic governor to serve Montana in 20 years, Schweitzer runs his government like a ranch: with careful planning and ample saving. The state currently has a $371 million surplus.

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Open cast mining for iron ore.

When asked about Montana's position as one of only three states (including North Dakota and Texas) without a budget deficit, Schweitzer said that, “We’ve run the state of Montana the way you would run a ranch. When times are good the cattle are fat, grass is high, crops are good. Put some grain in the den. Store some hay to get you through the second winter, not just the first one.”

Instead of squandering the state’s economic gains in the five years before the recession, Schweitzer planned ahead. “When all the states were awash in cash, Montana was the same. We just put money aside,” he said. When the recession arrived in Montana, the state had a $371 million cushion to soften the blow of 7.3 percent state unemployment. And still, the Montanan government continued to save.

As part of those saving efforts, Schweitzer cut state agency spending 5 percent across the board. He also cut taxes for more Montanans than any other time in the state’s history, including a $400 rebate to Montana homeowners to pump back into the economy.

According to Schweitzer, Montana’s tax rate is the sixth most business friendly in the United States. “We don’t have a sales tax. Our energy is less expensive in Montana than almost anyplace else,” he said. “And I can promise you this: there’s no place in the world that’s better for raising a family and starting and growing a small business and building a community.”

Governor Schweitzer and Leuitenant Governor John Bohlinger voluntarily cut their own salaries by $17,000. Schweitzer also worked to upgrade Montana’s bond rating for the first time in 26 years with Moody’s, Fitch, and Standard & Poors.

Montana was ranked 36th in CNBC’s Top States for Business rankings. However, Forbes magazine rates Montana as the fastest climber for business friendliness, going from 42nd to 34th to 13th in just a few years.

“If you’re in the pipeline business, the transmission business, if you are in the oil and gas business, if you’re in the coal business, have a business that can feed any of those businesses, what you need to do is get a bus ticket a business ticket, or drive to Montana because we’ve got something for you,” said Schweitzer.

Brian Schweitzer, Governor (D-Mont.)

Governor Brian Schweitzer (D-Mont.) talks to CNBC's Nicole Lapin as part of the "States of Pain" series.

Part of Schweitzer’s strategy is to promote Montana as a business state, doing everything he can to help local businesses thrive—even giving out his home phone number for house calls—while working to attract out-of-state companies to Montana.

“If you come out to Montana, you want to start a business, call me. Call me at my home number,” he said. “It’s in the book, and I’ll show you around.”

At 7.1 percent, the state has the 11th lowest unemployment ratein the nation, well below the 9.6 percent federal unemployment rate. Montana stands to gain 11,000 jobs under the American Recovery and Reinvestment Act, a sizeable number in population of just under a million people.

Last year, Governor Schweitzer took the question of state budget cuts back to the source, by asking Montanans which state services they felt should be decreased. The winners were extending the computer replacement cycle, cutting back on BlackBerrys for state employees, and reducing the number of state-owned cars on the road.

In response to criticism that he had to rely on average Montanans to help fix the state’s fiscal problems, Schweitzer said, “That’s exactly what they say in Washington DC. ‘Don’t sully us with all of your ideas out there from the country. Just because you can run your business more efficient, that doesn’t affect us in Washington DC.’”

“Hell yea it does,” he continued. “The best ideas have always come from small businesses. If you want to find out how to run a business more efficiently, ask someone who has ten employees, not somebody that has 100,000.”

While his state is among the smallest in the U.S. for population, Schweitzer emphasized that every state, regardless of size, has the same basic operations. He said that there is a feeling among Montanans that Washington, DC is broken, unable to accomplish change because it is too bogged down with budget costs and a bloated federal workforce.

“85 percent of Montana’s budget, as in every other state, is to educate, to medicate, to incarcerate, he said.

“Every one of us runs the same business. We might be a little smaller shop than the big shop but we have to buy our goods and services the way they do, we have to sell them the same way they do. So just because you’re a Wal-Mart , doesn’t mean that you’re not the same business as the ma and pa store down the road. We’re the ma and pa store that’s more efficient than Wal-Mart. “

Look for Nicole Lapin's interview with Montana Governor Brian Schweitzer on Tuesday, October 26 in her "States of Pain" report on "Worldwide Exchange,"5-6am ET on CNBC.